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Impact measurement identifies the positive and negative effects business activities have on the environment and society. It also uncovers ways of mitigating the adverse effects to maximize the positive.
Most customers prefer doing business with responsible companies. Employees also prefer to work for companies that positively impact the world. Measuring and reporting on impact demonstrates your corporate citizenship to stakeholders, leading to a competitive advantage.
The benefits of environmental, social, and governance (ESG) and corporate social responsibility (CSR) measurement and reporting are astounding. An impact report can positively affect business reputation, employee engagement, customer retention, and brand recognition. Impact measurement can also result in operational cost savings, organizational growth, better financial performance, and easier access to capital.
Why measure and report?
In this age of activism, companies need to retain the trust of their stakeholders through conscious business practices. Measuring social impact and reporting on corporate sustainability goals and policies can create long-term value for companies large and small, including:
📈 Increase in capital
Investors and lenders are increasingly interested in companies with ESG programs since they deliver more ROI than those that operate without ethical business practices. A social impact report that shows measurable returns and ESG performance can attract investors and retain their interest in your financial potential. Devoted investors ensure your company can raise future capital and compete in your market.
😎 Engaged workforce
Employees are more committed to companies that value society and the environment as much as profit. Corporate philanthropy and ESG initiatives can increase employees’ job satisfaction, engagement, motivation, and productivity.
👍 Brand loyalty
Today’s consumers care about environmental, societal, and cultural issues. According to the Meaningful Brands report, 73% of consumers believe brands must act now for the good of society and the planet – 64% prefer to buy from companies with a reputation for purpose as well as profit. Social impact and CSR reports can attract consumers to your brand, encourage them to purchase your products or services, and turn them into loyal customers.
✅ Tax advantages
Federal tax credits and incentives are a major benefit of impact measurement. Aside from positively impacting communities and the environment, ESG investments can reduce your company’s tax liability and effective tax rate. Instead of paying higher taxes to the government, consider investing in projects that produce benefits to society, the planet, and your bottom line.
📉 Reduced operational waste
According to McKinsey research, ESG can reduce costs substantially, combat rising operating expenses, and affect operating profits by up to 60%. ESG reporting can help you evaluate investments and understand whether or not company resources are being used effectively.
Take a close look at your report’s financial metrics to ensure you are implementing programs that positively affect your company’s profitability and reputation. If a program is costly, has low engagement rates, or is harmful to the environment, consider removing it from your strategy altogether.
Tips for measuring and reporting
Assessing social and environmental impact can be challenging, plus the process is unique to every business. However, you can use the following strategies to measure, analyze, and report your CSR and ESG activities:
- Decide on a framework: A structured approach to measuring performance across a range of metrics is critical to quantifying the impact that your program is making. Our social impact platform includes a comprehensive reporting tool that allows you to measure performance in real time.
- Identify your metrics: In your ESG or CSR report, you can disclose metrics such as volunteer hours, corporate giving, health and wellbeing, diversity and inclusion, supply chain management, carbon emissions, water usage, fuel consumption, electricity usage, return on investment (ROI), and much more. To identify your metrics, consider your company’s outputs and outcomes. Outputs identify what you produced without addressing the value or impact. Outcomes are the achievements or performance that result from your organization's activities.
- Value qualitative data: Qualitative data is necessary when analyzing your impact. The cultural shift that your organization will experience following the implementation of a social impact or ESG program is noteworthy. Share accounts of employee engagement and workplace camaraderie to present a holistic overview of your program's impact.
- Analyze and learn: Some of your organization's efforts might not be successful or create as much impact as you hoped. Allow your CSR and ESG report to influence your strategy and the programs you implement in the future. Failures are often the best opportunities to learn and grow.
- Share your report: After measuring your social impact, you can share the report and findings with your audience, including your clients, employees, community, and other stakeholders. A popular method of sharing impact reports is via a dedicated page on your website. This webpage should highlight your company's purpose and values, outline your CSR and ESG initiatives, and allow visitors to download and view your yearly impact report.
Use social impact to propel business goals
You can start measuring and reporting on CSR and ESG by incorporating corporate philanthropy and corporate sustainability initiatives into your day-to-day business activities. Donate spare change from company cards to nonprofits that align with corporate giving goals, engage employees in quarterly charity auctions, and offer local volunteering opportunities. These are just a few ways to infuse social impact into your business operations and meet your sustainability and engagement goals.
